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July 24, 2013

CBS Corp. Chief Executive Leslie Moonves weighed in on the company's carriage dispute with Time Warner Cable Inc., calling it a "crucial struggle" for fair compensation, as the companies extended the deadline to reach a deal to Thursday morning. In a memo to staff on Tuesday morning, Mr. Moonves said CBS's flagship broadcast network has some of the industry's most popular programs, including NFL games, "The Big Bang Theory," "NCIS," and "60 Minutes." He said cable networks with "considerably less viewership" are getting bigger fees from Time Warner Cable. "Networks that are watched by audiences much smaller than that of our lowest-rated shows are receiving much more compensation," he wrote in the memo. "Clearly something is out of whack."

Time Warner Cable spokeswoman Maureen Huff said in an emailed statement that "every decision we make on programming is based on a variety of factors, including unique content, cost and popularity. We are constantly engaged in making our lineup the best value we can for our customers." She added that the company has offered CBS "significant fees" but "their current demands don't represent a good value for our customers." Time Warner Cable is continuing to negotiate with CBS and hopes to reach an agreement before the deadline, Ms. Huff said.

A deadline for a deal had been Wednesday but the companies extended it to Thursday morning. If they don't reach a new carriage agreement by then, some three million Time Warner Cable subscribers in markets including Los Angeles, New York and Dallas will see CBS dropped from their service. Mr. Moonves said CBS has offered Time Warner Cable a further short-term extension to allow more negotiations. Often, these sorts of carriage disputes end in a last-minute compromise, as both sides have something to lose from a signal blackout. "As you can imagine, we don't take this situation lightly," Mr. Moonves said. He said Time Warner Cable is "unique in its aggressive approach" to content carriage negotiations in the industry. He said CBS has been "successfully negotiating new, current market deals that work well for us and our partners," including major distributors such as Comcast Corp., Cablevision Systems Inc., DirecTV, Dish Network Corp., Verizon Communications Inc.'s FiOS system and AT&T Inc. "The future success of any company is predicated on getting fairly compensated for the product it provides," Mr. Moonves said. "That's a goal we'll pursue, on every platform, with every partner."

Time Warner Cable's Ms. Huff said CBS claims "they've offered us the same rates, but privately they've refused to offer us assurances that the rate they are seeking for CBS is the same rate they are seeking from others." She added that "we're not the only ones" complaining about rising programming costs and pointed to other public disputes over the past year between other distributors and programmers, including local broadcast stations and national cable networks.

In an earlier statement, Time Warner Cable said the company will help subscribers find CBS programming in the event of a blackout. "Virtually all CBS network primetime programming is available online for free within a day of original airing," Time Warner Cable said. "With the exception of live news and sports, CBS primetime programming can be found on cbs.com, Hulu, Amazon, Netflix, and iTunes for a free or a small fee. All of CBS's broadcast TV programming is available free over-the-air." The company also noted that in New York City, consumers can sign up for Aereo, a subscription service that streams broadcast TV signals over the Web. Wall Street Journal; more in Los Angeles Times

Sen. John McCain's proposed legislation to force cable operators to offer channels a la carte gained new co-sponsor on Tuesday, as Sen. Richard Blumenthal (D-Conn.) announced that he would back the bill. Blumenthal is a member of the Senate Commerce Committee, which would have jurisdiction over such legislation. "Consumers should not have to pay for television channels they don't want or watch," Blumenthal said. "The current antiquated, antidemocratic system imposes all-or-nothing cable packages that give consumers no control over their cable bill, and prevent subscribers from voting with their feet when they are unhappy." McCain said that "the government and special interests have stacked the regulatory deck in favor of preserving an outdated business model that forces consumers to buy - at ever-increasing prices - 'bundled' cable packages filled with channels they don't want to watch."

A spokesman for the National Cable and Telecommunications Assn. said they had no comment. But cable executives have argued that offering channels a la carte would actually reduce diversity, in that lesser-rated channels would struggle to survive. Meanwhile, they argue that bigger channels like ESPN could command hefty prices from consumers, perhaps even driving up their bills even further. Some noted that ESPN is based in Blumenthal's home state. The Television Consumer Freedom Act establishes that cable, satellite or any multichannel video operator has the "legal right" to offer any channel on an a la carte basis. Although it was given long odds of passage, McCain has said that it has "overwhelming support" among consumers. Variety

The buzz is building around an oft-talked about but still-on-the-sidelines potential candidate in next year's governor's race. The chief of Pennsylvania's Democratic Party says it's not a matter of if, but when, state Treasurer Rob McCord will jump into the race to challenge Gov. Corbett in 2014. Party chairman Jim Burn said in a conference call today with reporters that he fully expects McCord to join the crowded field of candidates. "We all know it's an inevitability that the treasure is going to announce at some point," Burn said. McCord spokesman Mark Nevins fanned the flames, while keeping the mystery alive. "He is right an announcement is coming soon," he said. "Treasurer McCord continues to believe Pennsylvania would not be well-served by electing a politician for governor. Nevins said McCord's business background would better serve the Commonwealth, adding, "an announcement will come when ready to make it official."

McCord is making no secret of his aspirations; he has formed a campaign committee and begun raising money. Not to mention, even the press releases from the Treasurer's office are starting to read like attack ads on Corbett. But Burn downplayed any suggestion that an even bigger name like Sen. Bob Casey Jr., or rising star Attorney General Kathleen Kane might make a late entry in the race. "There's no secret candidate jumping out from behind the curtain," he said. "Not that I'm aware of." So far, the Democratic primary field has grown to five: U.S. Rep. Allyson Schwartz, former DEP secretaries John Hanger and Kathleen McGinty, former revenue secretary Tom Wolfe and Harrisburg area minister Max Myers. The conference call was organized to announce the party's new "Promises Made, Promises Broken" campaign to highlight a series of what it says is Corbett's record of unfulfilled campaign promises to voters. The party this week focused on Corbett's pledge to make Pennsylania a leader in job creation. PoliticsPA reports the latest jobs report shows Pennsylvania 45th in job creation. philly.com